THIRD DIVISION

G.R. No. 158085 October 14, 2005

REPUBLIC OF THE PHILIPPINES, Represented by the COMMISSIONER OF INTERNAL

REVENUE, Petitioner,
vs.
SUNLIFE ASSURANCE COMPANY OF CANADA, Respondent.

DECISION

PANGANIBAN, J.:

aving satisfactorily proven to the Court of Tax Appeals, to the Court of Appeals and
to this Court that it is a bona fide cooperative, respondent is entitled to exemption
from the payment of taxes on life insurance premiums and documentary stamps. Not
being governed by the Cooperative Code of the Philippines, it is not required to be
registered with the Cooperative Development Authority in order to avail itself of the
tax exemptions. Significantly, neither the Tax Code nor the Insurance Code
mandates this administrative registration.

The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to
nullify the January 23, 2003 Decision2 and the April 21, 2003 Resolution3 of the
Court of Appeals (CA) in CA-GR SP No. 69125. The dispositive portion of the
Decision reads as follows:

"WHEREFORE, the petition for review is hereby DENIED."4

The Facts

The antecedents, as narrated by the CA, are as follows:

"Sun Life is a mutual life insurance company organized and existing under the laws
of Canada. It is registered and authorized by the Securities and Exchange
Commission and the Insurance Commission to engage in business in the Philippines

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as a mutual life insurance company with principal office at Paseo de Roxas, Legaspi
Village, Makati City.

"On October 20, 1997, Sun Life filed with the [Commissioner of Internal Revenue]
(CIR) its insurance premium tax return for the third quarter of 1997 and paid the
premium tax in the amount of ₱31,485,834.51. For the period covering August 21 to
December 18, 1997, petitioner filed with the CIR its [documentary stamp tax (DST)]
declaration returns and paid the total amount of ₱30,000,000.00.

"On December 29, 1997, the [Court of Tax Appeals] (CTA) rendered its decision
in Insular Life Assurance Co. Ltd. v. [CIR], which held that mutual life insurance
companies are purely cooperative companies and are exempt from the payment of
premium tax and DST. This pronouncement was later affirmed by this court in [CIR]
v. Insular Life Assurance Company, Ltd. Sun Life surmised that[,] being a mutual life
insurance company, it was likewise exempt from the payment of premium tax and
DST. Hence, on August 20, 1999, Sun Life filed with the CIR an administrative claim
for tax credit of its alleged erroneously paid premium tax and DST for the
aforestated tax periods.

"For failure of the CIR to act upon the administrative claim for tax credit and with
the 2-year period to file a claim for tax credit or refund dwindling away and about to
expire, Sun Life filed with the CTA a petition for review on August 23, 1999. In its
petition, it prayed for the issuance of a tax credit certificate in the amount of
₱61,485,834.51 representing ₱31,485,834.51 of erroneously paid premium tax for
the third quarter of 1997 and ₱30,000[,000].00 of DST on policies of insurance from
August 21 to December 18, 1997. Sun Life stood firm on its contention that it is a
mutual life insurance company vested with all the characteristic features and
elements of a cooperative company or association as defined in [S]ection 121 of the
Tax Code. Primarily, the management and affairs of Sun Life were conducted by its
members; secondly, it is operated with money collected from its members; and,
lastly, it has for its purpose the mutual protection of its members and not for profit
or gain.

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"In its answer, the CIR, then respondent, raised as special and affirmative defenses
the following:

‘7. Petitioner’s (Sun Life’s) alleged claim for refund is subject to administrative
routinary investigation/examination by respondent’s (CIR’s) Bureau.

‘8. Petitioner must prove that it falls under the exception provided for under Section
121 (now 123) of the Tax Code to be exempted from premium tax and be entitled to
the refund sought.

‘9. Claims for tax refund/credit are construed strictly against the claimants thereof as
they are in the nature of exemption from payment of tax.

‘10. In an action for tax credit/refund, the burden is upon the taxpayer to establish
its right thereto, and failure to sustain this burden is fatal to said claim x x x.

‘11. It is incumbent upon petitioner to show that it has complied with the provisions
of Section 204[,] in relation to Section 229, both in the 1997 Tax Code.’

"On November 12, 2002, the CTA found in favor of Sun Life. Quoting largely from its
earlier findings in Insular Life Assurance Company, Ltd. v. [CIR], which it found to
be on all fours with the present action, the CTA ruled:

‘The [CA] has already spoken. It ruled that a mutual life insurance company is a
purely cooperative company[;] thus, exempted from the payment of premium and
documentary stamp taxes. Petitioner Sun Life is without doubt a mutual life
insurance company. x x x.

‘xxxxxxxxx

‘Being similarly situated with Insular, Petitioner at bar is entitled to the same
interpretation given by this Court in the earlier cases of The Insular Life Assurance
Company, Ltd. vs. [CIR] (CTA Case Nos. 5336 and 5601) and by the [CA] in the case
entitled [CIR] vs. The Insular Life Assurance Company, Ltd., C.A. G.R. SP No. 46516,
September 29, 1998. Petitioner Sun Life as a mutual life insurance company is[,]
therefore[,] a cooperative company or association and is exempted from the

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payment of premium tax and [DST] on policies of insurance pursuant to Section 121
(now Section 123) and Section 199[1]) (now Section 199[a]) of the Tax Code.’

"Seeking reconsideration of the decision of the CTA, the CIR argued that Sun Life
ought to have registered, foremost, with the Cooperative Development Authority
before it could enjoy the exemptions from premium tax and DST extended to purely
cooperative companies or associations under [S]ections 121 and 199 of the Tax
Code. For its failure to register, it could not avail of the exemptions prayed for.
Moreover, the CIR alleged that Sun Life failed to prove that ownership of the
company was vested in its members who are entitled to vote and elect the Board of
Trustees among [them]. The CIR further claimed that change in the 1997 Tax Code
subjecting mutual life insurance companies to the regular corporate income tax rate
reflected the legislature’s recognition that these companies must be earning profits.

"Notwithstanding these arguments, the CTA denied the CIR’s motion for
reconsideration.

"Thwarted anew but nonetheless undaunted, the CIR comes to this court via this
petition on the sole ground that:

‘The Tax Court erred in granting the refund[,] because respondent does not fall
under the exception provided for under Section 121 (now 123) of the Tax Code to
be exempted from premium tax and DST and be entitled to the refund.’

"The CIR repleads the arguments it raised with the CTA and proposes further that
the [CA] decision in [CIR] v. Insular Life Assurance Company, Ltd. is not controlling
and cannot constitute res judicata in the present action. At best, the
pronouncements are merely persuasive as the decisions of the Supreme Court alone
have a universal and mandatory effect."5

Ruling of the Court of Appeals

In upholding the CTA, the CA reasoned that respondent was a purely cooperative
corporation duly licensed to engage in mutual life insurance business in the
Philippines. Thus, respondent was deemed exempt from premium and documentary
stamp taxes, because its affairs are managed and conducted by its members with

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money collected from among themselves, solely for their own protection, and not for
profit. Its members or policyholders constituted both insurer and insured who
contribute, by a system of premiums or assessments, to the creation of a fund from
which all losses and liabilities were paid. The dividends it distributed to them were
not profits, but returns of amounts that had been overcharged them for insurance.

For having satisfactorily shown with substantial evidence that it had erroneously paid
and seasonably filed its claim for premium and documentary stamp taxes,
respondent was entitled to a refund, the CA ruled.

Hence, this Petition.6

The Issues

Petitioner raises the following issues for our consideration:

"I.

"Whether or not respondent is a purely cooperative company or association under

Section 121 of the National Internal Revenue Code and a fraternal or beneficiary
society, order or cooperative company on the lodge system or local cooperation plan
and organized and conducted solely by the members thereof for the exclusive
benefit of each member and not for profit under Section 199 of the National Internal
Revenue Code.

"II.

"Whether or not registration with the Cooperative Development Authority is a sine

qua non requirement to be entitled to tax exemption.

"III.

"Whether or not respondent is exempted from payment of tax on life insurance

premiums and documentary stamp tax."7

We shall tackle the issues seriatim.

The Court’s Ruling

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The Petition has no merit.

First Issue:

Whether Respondent Is a Cooperative

The Tax Code defines a cooperative as an association "conducted by the members

thereof with the money collected from among themselves and solely for their own
protection and not for profit."8 Without a doubt, respondent is a cooperative
engaged in a mutual life insurance business.

First, it is managed by its members. Both the CA and the CTA found that the
management and affairs of respondent were conducted by its member-
policyholders.9

A stock insurance company doing business in the Philippines may "alter its
organization and transform itself into a mutual insurance company."10 Respondent
has been mutualized or converted from a stock life insurance company to a nonstock
mutual life insurance corporation11 pursuant to Section 266 of the Insurance Code
of 1978.12 On the basis of its bylaws, its ownership has been vested in its member-
policyholders who are each entitled to one vote;13and who, in turn, elect from
among themselves the members of its board of trustees.14 Being the governing
body of a nonstock corporation, the board exercises corporate powers, lays down all
corporate business policies, and assumes responsibility for the efficiency of
management.15

Second, it is operated with money collected from its members. Since respondent is
composed entirely of members who are also its policyholders, all premiums collected
obviously come only from them.16

The member-policyholders constitute "both insurer and insured"17 who "contribute,

by a system of premiums or assessments, to the creation of a fund from which all
losses and liabilities are paid."18 The premiums19 pooled into this fund are
earmarked for the payment of their indemnity and benefit claims.

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Third, it is licensed for the mutual protection of its members, not for the profit of
anyone.

As early as October 30, 1947, the director of commerce had already issued a license
to respondent -- a corporation organized and existing under the laws of Canada -- to
engage in business in the Philippines.20 Pursuant to Section 225 of Canada’s
Insurance Companies Act, the Canadian minister of state (for finance and
privatization) also declared in its Amending Letters Patent that respondent would be
a mutual company effective June 1, 1992.21 In the Philippines, the insurance
commissioner also granted it annual Certificates of Authority to transact life
insurance business, the most relevant of which were dated July 1, 1997 and July 1,
1998.22

A mutual life insurance company is conducted for the benefit of its member-
policyholders,23 who pay into its capital by way of premiums. To that extent, they
are responsible for the payment of all its losses.24 "The cash paid in for premiums
and the premium notes constitute their assets x x x."25 In the event that the
company itself fails before the terms of the policies expire, the member-
policyholders do not acquire the status of creditors.26 Rather, they simply become
debtors for whatever premiums that they have originally agreed to pay the
company, if they have not yet paid those amounts in full, for "[m]utual companies x
x x depend solely upon x x x premiums."27 Only when the premiums will have
accumulated to a sum larger than that required to pay for company losses will the
member-policyholders be entitled to a "pro rata division thereof as profits."28

Contributing to its capital, the member-policyholders of a mutual company are

obviously also its owners.29Sustaining a dual relationship inter se, they not only
contribute to the payment of its losses, but are also entitled to a proportionate
share30 and participate alike31 in its profits and surplus.

Where the insurance is taken at cost, it is important that the rates of premium
charged by a mutual company be larger than might reasonably be expected to carry
the insurance, in order to constitute a margin of safety. The table of mortality used
will show an admittedly higher death rate than will probably prevail; the assumed

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interest rate on the investments of the company is made lower than is expected to
be realized; and the provision for contingencies and expenses, made greater than
would ordinarily be necessary.32 This course of action is taken, because a mutual
company has no capital stock and relies solely upon its premiums to meet
unexpected losses, contingencies and expenses.

Certainly, many factors are considered in calculating the insurance premium. Since
they vary with the kind of insurance taken and with the group of policyholders
insured, any excess in the amount anticipated by a mutual company to cover the
cost of providing for the insurance over its actual realized cost will also vary. If a
member-policyholder receives an excess payment, then the apportionment must
have been based upon a calculation of the actual cost of insurance that the company
has provided for that particular member-policyholder. Accordingly, in apportioning
divisible surpluses, any mutual company uses a contribution method that aims to
distribute those surpluses among its member-policyholders, in the same proportion
as they have contributed to the surpluses by their payments.33

Sharing in the common fund, any member-policyholder may choose to withdraw

dividends in cash or to apply them in order to reduce a subsequent premium,
purchase additional insurance, or accelerate the payment period. Although the
premium made at the beginning of a year is more than necessary to provide for the
cost of carrying the insurance, the member-policyholder will nevertheless receive the
benefit of the overcharge by way of dividends, at the end of the year when the cost
is actually ascertained. "The declaration of a dividend upon a policy reduces pro
tanto the cost of insurance to the holder of the policy. That is its purpose and
effect."34

A stipulated insurance premium "cannot be increased, but may be lessened annually

by so much as the experience of the preceding year has determined it to have been
greater than the cost of carrying the insurance x x x."35 The difference between
that premium and the cost of carrying the risk of loss constitutes the so-called
"dividend" which, however, "is not in any real sense a dividend."36 It is a technical
term that is well understood in the insurance business to be widely different from
that to which it is ordinarily attached.

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The so-called "dividend" that is received by member-policyholders is not a portion of
profits set aside for distribution to the stockholders in proportion to their subscription
to the capital stock of a corporation.37 One, a mutual company has no capital stock
to which subscription is necessary; there are no stockholders to speak of, but only
members. And, two, the amount they receive does not partake of the nature of a
profit or income. The quasi-appearance of profit will not change its character. It
remains an overpayment, a benefit to which the member-policyholder is equitably
entitled.38

Verily, a mutual life insurance corporation is a cooperative that promotes the welfare
of its own members. It does not operate for profit, but for the mutual benefit of its
member-policyholders. They receive their insurance at cost, while reasonably and
properly guarding and maintaining the stability and solvency of the
company.39 "The economic benefits filter to the cooperative members. Either
equally or proportionally, they are distributed among members in correlation with
the resources of the association utilized."40

It does not follow that because respondent is registered as a nonstock corporation

and thus exists for a purpose other than profit, the company can no longer make
any profits.41 Earning profits is merely its secondary, not primary, purpose. In fact,
it may not lawfully engage in any business activity for profit, for to do so would
change or contradict its nature42 as a non-profit entity.43 It may, however, invest
its corporate funds in order to earn additional income for paying its operating
expenses and meeting benefit claims. Any excess profit it obtains as an incident to
its operations can only be used, whenever necessary or proper, for the furtherance
of the purpose for which it was organized.44

Second Issue:

Whether CDA Registration Is Necessary

Under the Tax Code although respondent is a cooperative, registration with the
Cooperative Development Authority (CDA)45 is not necessary in order for it to be
exempt from the payment of both percentage taxes on insurance premiums, under

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Section 121; and documentary stamp taxes on policies of insurance or annuities it
grants, under Section 199.

First, the Tax Code does not require registration with the CDA. No tax provision
requires a mutual life insurance company to register with that agency in order to
enjoy exemption from both percentage and documentary stamp taxes.

A provision of Section 8 of Revenue Memorandum Circular (RMC) No. 48-91 requires

the submission of the Certificate of Registration with the CDA,46 before the issuance
of a tax exemption certificate. That provision cannot prevail over the clear absence
of an equivalent requirement under the Tax Code. One, as we will explain below, the
Circular does not apply to respondent, but only to cooperatives that need to be
registered under the Cooperative Code. Two, it is a mere issuance directing all
internal revenue officers to publicize a new tax legislation. Although the Circular
does not derogate from their authority to implement the law, it cannot add a
registration requirement,47when there is none under the law to begin with.

Second, the provisions of the Cooperative Code of the Philippines48 do not apply.
Let us trace the Code’s development in our history.

As early as 1917, a cooperative company or association was already defined as one

"conducted by the members thereof with money collected from among themselves
and solely for their own protection and not profit."49 In 1990, it was further defined
by the Cooperative Code as a "duly registered association of persons, with a
common bond of interest, who have voluntarily joined together to achieve a lawful
common social or economic end, making equitable contributions to the capital
required and accepting a fair share of the risks and benefits of the undertaking in
accordance with universally accepted cooperative principles."50

The Cooperative Code was actually an offshoot of the old law on cooperatives. In
1973, Presidential Decree (PD) No. 175 was
signed into law by then President Ferdinand E. Marcos in order to strengthen the
cooperative movement.51 The promotion of cooperative development was one of
the major programs of the "New Society" under his administration. It sought to
improve the country’s trade and commerce by enhancing agricultural production,

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cottage industries, community development, and agrarian reform through
cooperatives.52

The whole cooperative system, with its vertical and horizontal linkages -- from the
market cooperative of agricultural products to cooperative rural banks, consumer
cooperatives and cooperative insurance -- was envisioned to offer considerable
economic opportunities to people who joined cooperatives.53 As an effective
instrument in redistributing income and wealth,54 cooperatives were promoted
primarily to support the agrarian reform program of the government.55

Notably, the cooperative under PD 175 referred only to an organization composed

primarily of small producers and consumers who voluntarily joined to form a
business enterprise that they themselves owned, controlled, and patronized.56 The
Bureau of Cooperatives Development -- under the Department of Local Government
and Community Development (later Ministry of Agriculture)57 -- had the authority to
register, regulate and supervise only the following cooperatives: (1) barrio
associations involved in the issuance of certificates of land transfer; (2) local or
primary cooperatives composed of natural persons and/or barrio associations; (3)
federations composed of cooperatives that may or may not perform business
activities; and (4) unions of cooperatives that did not perform any business
activities.58 Respondent does not fall under any of the above-mentioned types of
cooperatives required to be registered under PD 175.

When the Cooperative Code was enacted years later, all cooperatives that were
registered under PD 175 and previous laws were also deemed registered with the
CDA.59 Since respondent was not required to be registered under the old law on
cooperatives, it followed that it was not required to be registered even under the
new law.

Furthermore, only cooperatives to be formed or organized under the Cooperative

Code needed registration with the CDA.60 Respondent already existed before the
passage of the new law on cooperatives. It was not even required to organize under
the Cooperative Code, not only because it performed a different set of functions, but

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also because it did not operate to serve the same objectives under the new law --
particularly on productivity, marketing and credit extension.61

The insurance against losses of the members of a cooperative referred to in Article

6(7) of the Cooperative Code is not the same as the life insurance provided by
respondent to member-policyholders. The former is a function of a service
cooperative,62 the latter is not. Cooperative insurance under the Code is limited in
scope and local in character. It is not the same as mutual life insurance.

We have already determined that respondent is a cooperative. The distinguishing

feature of a cooperative enterprise63 is the mutuality of cooperation among its
member-policyholders united for that purpose.64 So long as respondent meets this
essential feature, it does not even have to use65 and carry the name of a
cooperative to operate its mutual life insurance business. Gratia argumenti that
registration is mandatory, it cannot deprive respondent of its tax exemption privilege
merely because it failed to register. The nature of its operations is clear; its purpose
well-defined. Exemption when granted cannot prevail over administrative
convenience.

Third, not even the Insurance Code requires registration with the CDA. The
provisions of this Code primarily govern insurance contracts; only if a particular
matter in question is not specifically provided for shall the provisions of the Civil
Code on contracts and special laws govern.66

True, the provisions of the Insurance Code relative to the organization and operation
of an insurance company also apply to cooperative insurance entities organized
under the Cooperative Code.67 The latter law, however, does not apply to
respondent, which already existed as a cooperative company engaged in mutual life
insurance prior to the laws passage of that law. The statutes prevailing at the time
of its organization and mutualization were the Insurance Code and the Corporation
Code, which imposed no registration requirement with the CDA.

Third Issue:

Whether Respondent Is Exempted

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from Premium Taxes and DST

Having determined that respondent is a cooperative that does not have to be

registered with the CDA, we hold that it is entitled to exemption from both premium
taxes and documentary stamp taxes (DST).

The Tax Code is clear. On the one hand, Section 121 of the Code exempts
cooperative companies from the 5 percent percentage tax on insurance premiums.
On the other hand, Section 199 also exempts from the DST, policies of insurance or
annuities made or granted by cooperative companies. Being a cooperative,
respondent is thus exempt from both types of taxes.

It is worthy to note that while RA 8424 amending the Tax Code has deleted the
income tax of 10 percent imposed upon the gross investment income of mutual life
insurance companies -- domestic68 and foreign69 -- the provisions of Section 121
and 199 remain unchanged.70

Having been seasonably filed and amply substantiated, the claim for exemption in
the amount of ₱61,485,834.51, representing percentage taxes on insurance
premiums and documentary stamp taxes on policies of insurance or annuities that
were paid by respondent in 1997, is in order. Thus, the grant of a tax credit
certificate to respondent as ordered by the appellate court was correct.

WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and
Resolution are AFFIRMED. No pronouncement as to costs.

SO ORDERED.

ARTEMIO V. PANGANIBAN

Associate Justice

Chairman, Third Division

WECONCUR:

ANGELINA SANDOVAL-GUTIERREZ RENATO C. CORONA

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Associate Justice Associate Justice

CONCHITA CARPIO MORALES CANCIO C. GARCIA

Associate Justice Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court’s Division.

ARTEMIO V. PANGANIBAN

Associate Justice

Chairman, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairman’s
Attestation, it is hereby certified that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the opinion of
the Court’s Division.

HILARIO G. DAVIDE, JR.

Chief Justice

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Footnotes

1 Rollo, pp. 7-32.

2 Id., pp. 37-44. Thirteenth Division. Penned by Justice Oswaldo D. Agcaoili (chair)
and concurred in by Justices Eliezer R. de los Santos and Regalado E. Maambong
(members).

3 Id., p. 46.

4 CA Decision, p. 8; rollo, p. 44.

5 Id., pp. 1-4 & 37-40. Italics in the original.

6 This case was deemed submitted for decision on April 1, 2005, upon this Court’s
receipt of petitioner’s Memorandum, signed by Assistant Solicitor General Nestor J.
Ballacillo and Associate Solicitor Raymond Joseph G. Javier. Respondent’s
Memorandum, signed by Atty. Ma. Emeren V. Vallente, was received by this Court
on December 6, 2004.

7 Petitioner’s Memorandum, p. 11; rollo, p. 384. Original in uppercase.

8 §121 of the National Internal Revenue Code prior to its amendment by RA 8424.

9 CA Decision, p. 6; rollo, p. 42; and CTA Decision, p. 7; rollo, p. 57.

The affairs of mutual companies "are managed by the policyholders." Ohio Farmers
Indemnity Co. v. Commissioner of Internal Revenue, 108 F 2d 665, 667, January 15,
1940, per Hamilton, Circuit J.

10 Last paragraph of §188 of the Insurance Code of 1978.

11 Art. 7 of respondent’s Amended Articles of Incorporation.

12 Presidential Decree (PD) No. 1460.

13 "Unless so limited, broadened or denied, each member, regardless of class, shall

be entitled to one vote." 1st paragraph of §89 of Batas Pambansa (BP) Blg. 68,
otherwise known as "The Corporation Code of the Philippines."

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14 "No person shall be elected as trustee unless he is a member of the corporation."
2nd paragraph of §92 of BP 68.

15 Campos Jr. & Campos, The Corporation Code: Comments, Notes and Selected
Cases, Vol. I (1990), p. 340.

16 CA Decision, p. 6; rollo, p. 42; and CTA Decision, p. 7; rollo, p. 57.

17 Keehn v. Hodge Drive-It-Yourself, Inc., 53 NE 2d 69, 71, July 19, 1943, per
Hildebrant, J.

18 Minnick v. State Farm Mutual Automobile Insurance Co., 174 A 2d 706, 709,
October 9, 1961, per Storey, J.

19 A premium is the agreed price for assuming and carrying the risk of insurance.
De Leon, The Law on Insurance (with Insolvency Law), 10th ed. (2003), p. 114.

20 Rollo, p. 97.

21 Id., p. 210.

22 Id., pp. 98-99.

23 Public Housing Administration v. Housing Authority of Bogalusa, 137 So. 2d 315,

321, February 19, 1962.

24 Ibid.

25 Gleason v. Prudential Fire Insurance Co., 151 SW 1030, 1033, December 19,
1912, per Green, J.

26 Public Housing Administration v. Housing Authority of Bogalusa, supra.

27 Ohio Farmers Indemnity Co. v. Commissioner of Internal Revenue, supra.

28 Public Housing Administration v. Housing Authority of Bogalusa, supra, per

McCaleb, J.

29 Ibid.

30 Keehn v. Hodge Drive-It-Yourself, Inc., supra.

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31 Ohio Farmers Indemnity Co. v. Commissioner of Internal Revenue, supra.

32 Mutual Benefit Life Insurance Co. v. Herold, 198 F 199, 204, July 29, 1912.

33 Rhine v. New York Life Insurance Co., 6 NE 2d 74, 76-77, December 31, 1936.

34 Id., p. 78, December 31, 1936, per Lehman, J.

35 Mutual Benefit Life Insurance Co. v. Herold, id., 204-205, per Cross, District J.

36 Ibid.

37 Campos Jr. & Campos, The Corporation Code: Comments, Notes and Selected
Cases, Vol. II (1990), p. 209.

38 Mutual Benefit Life Insurance Co. v. Herold, supra.

39 Ibid.

40 Nueva Ecija I Electric Cooperative, Inc. v. NLRC, 380 Phil. 44, 58, January 24,
2000, per Quisumbing, J.

41 Campos Jr. & Campos, The Corporation Code: Comments, Notes and Selected
Cases, Vol. I (1990), p. 44.

42 §14(2) of BP 68.

43 De Leon, The Law on Partnerships and Private Corporations (1985), p. 401.

44 1st paragraph of §87 of BP 68.

45 The Cooperative Development Authority (CDA) is created under RA

6939. Camarines Norte Electric Cooperative, Inc. v. Torres, 350 Phil. 315, 318,
February 27, 1998.

46 §8.1.b of Revenue Memorandum Circular (RMC) No. 48-91.

47 De Leon, The Fundamentals of Taxation (12th ed., 1998), pp. 81-82.

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48 On 10 March 1990, then President Corazon C. Aquino has signed into law
Republic Act (RA) No. 6938, otherwise known as "The Cooperative Code of the
Philippines. Camarines Norte Electric Cooperative, Inc. v. Torres, supra.

49 La Compañia General de Tabacos de Filipinas v. Collector of Internal Revenue, 48

Phil. 35, 44, September 26, 1925, per Johns, J. (citing §1505 of the Administrative
Code of 1917).

50 Art. 3 of Republic Act (RA) No. 6938.

51 Cooperative Rural Bank of Davao City, Inc. v. Ferrer-Calleja, 165 SCRA 725, 732,
September 26, 1988, per Gancayco, J.

52 Fajardo & Abella, Cooperative (Kilusang Bayan), 1981, p. 211.

53 Id., p. 213.

54 §1 of Presidential Decree (PD) No. 175.

55 Fajardo & Abella, Cooperative (Kilusang Bayan); id., pp. 27 & 212; and 1st
paragraph of the Foreword of Clemente E. Terso Jr., CESO II, director of the Bureau
of Cooperatives Development.

56 §2 of PD 175.

57 Effective May 1, 1980. Fajardo & Abella, Cooperative (Kilusang Bayan); id., p. 27.

58 Items 1 to 4 of §8(b) of PD 175.

59 Art. 128 of RA 6938.

60 Art. 16 of RA 6938.

61 Art. 7 of RA 6938.

62 Art. 23(e) of RA 6938.

63 Minnick v. State Farm Mutual Automobile Insurance Co., supra.

64 Ohio Farmers Indemnity Co. v. Commissioner of Internal Revenue, supra.

18 If you want to become a lawyer, KEEP ON STUDYING!

65 Art. 124(1) of RA 6938.

66 De Leon, The Law on Insurance (with Insolvency Law); id., p. 1.

67 Art. 117 of RA 6938.

68 §24(d) of the Tax Code.

69 §25(a)(3) of the Tax Code.

70 In fact, §9 of RA 9243, signed into law by President Gloria Macapagal-Arroyo only

on February 17, 2004, retains §199(a) of the Tax Code.

19 If you want to become a lawyer, KEEP ON STUDYING!